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Margin Erosion

03/04/2024

When the amount of profit a business earns from selling a product or service decreases due to rising costs or falling sale prices.

An example of margin erosion occurring in a fuel distribution business:

A propane distribution firm sells a future delivery of 1,000 gallons of propane to one of their customers at a price of $2/gallon. That firm desires a margin of $1/gallon and that can be achieved at current market prices. However, three months in the future propane costs increase by $.30/gallon and the distributor’s margin has dropped 30%.

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Twin Feathers has taken the burden of the everyday supply logistics off our plate and allowed us to focus on our operations in the critical times of the year. They have educated our team along the way and helped us brainstorm options/risks that fit our business model. Twin Feathers has allowed the Tevis organization to explore opportunities within the supply and hedging arena that we would not have been exposed to without the relationship.

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